TIL Desk/Business/Bengaluru/ An increase in government borrowing can risk flooding the debt market while making it expensive for companies to borrow, outgoing Reserve Bank of India (RBI) Deputy Governor Viral Acharya has said taking yet another indirect dig at the Centre before demitting office.
In a lecture by him, which was shared by the RBI late on Monday, Acharya said India”s borrowing relative to its output has ranged from 67 per cent to 85 per cent since 2000 and has outpaced many emerging markets including China.
“As more government debt floods markets, the relative safety and liquidity premium attached by investors to high-rated corporate bonds diminishes, raising the cost of borrowing especially for AAA-rated borrowers and making it relatively less sensitive to policy rate cuts,” Acharya said.
